Accounting/Finance Review

Business Decision Making

1. Accounting deals with:

a. Measuring financial datab. Interpreting financial datac. Communicating financial datad. All of the above

2. The guidelines for accounting are called:

a. Finance Accounting Standards (FAS)b. Generally Accepted Accounting

Principles (GAAP)c. Public Oversight Committee Rules

(POCR)d. Good guesses

3. The main financial statements produced by accounting include:

Cash flows, statement of owners equity, profit statement

Income statement, Equity statement, Debit Review statement

Audit report, Annual report, Income report,

Income statement, Balance sheet, Cash Flow

4. The basic accounting equation:

a. Assets = Liabilities + Equitiesb. Debits = Credits plus fudge factorc. Sales = Credit sales collected +

Cash salesd. Profits = Sales x Profit Margin

5. The balance sheet

a. Shows a company’s financial position on a certain date

b. Shows what a company has in storage

c. Shows check transactions across a year

d. Presents the income of the company over a time frame

6. The main purpose of finance is to:

a. Make a lot of moneyb. Increase the value of the firmc. Appease shareholdersd. Help the environment

7. Balance Sheet

a. How much does this company own?b. How much do

they owe?c. Are they a Corporation?

8. Income Statement

a. What is the largest cost for the company?

b. What is another name for the variable costs that relate to making the product?

c. List one way to increase profits for this company.

d. If each company could decrease all selling costs by 10%, what would the newlevel of profits be?

9. Cash Flow

a. What is the largest use of cash for this company?

b. Where is the biggestsource of cash for thiscompany?

10. Breakeven

If the product costs $23 to produce in material, labor, and other costs, what is the lowest price that can be charged for the product?

11. Ratios

a. What is ROS?b. Should ROS be

high or low?c. What is ROA?d. Should it be high

or low?e. What is ROE?f. Should it be high

or low?

12. Raising funds

What are the three basic ways to raise funds for a business?

If a company needs money for the next two weeks, how could it raise the funds?

If a company needs money for ten years, how could it raise the funds?

13.

a. List two impacts on a company from issuing more stock.

b. List two impacts of using long-term debt.

c. List two consequences of issuing dividends.

14. Forecasting/Budgeting

a. If you were to develop a forecast/budget for the next year, what things would be calculated?

b. What would be the benefit of having a forecast? (Are the pro formas helpful?)

15. Global Financial Implications

If the game were to have foreign competition, list three things that could impact the company’s financial performance.